The International Chamber of Shipping (ICS) Board met in London last week to unanimously support the proposal for shipowners to make mandatory contributions per tonne of CO2 emitted to create a new IMO fund to be established by 2024. The fund will reward uptake by shipowners of low and zero-carbon fuels, and provide billions of dollars of funding annually for alternative fuel production and bunkering infrastructure in developing countries.
In particular, the ICS Board has submitted a revised proposal to the International Maritime Organization (IMO) that reaffirms the industry’s commitment to meet 2050 net zero carbon goals and sets out the full details of how this can be achieved via a ‘Fund and Reward’ system .
In the new submission, ICS has set out details of how a mandatory flat rate (levy-based) contribution by ships will be collected by an IMO Maritime Sustainability Fund. Importantly, to achieve consensus among governments, ICS explains how the contribution by ships per tonne of CO2 emitted can be set by IMO at a relatively low level and still be sufficient to narrow the price gap between alternative and conventional fuels.
The funds collected would be used to reward the uptake of alternative fuels by first movers, based on the CO2 emissions prevented, which will significantly reduce the price gap whilst minimising the additional cost of marine fuel to ensure that there will be no disproportionately negative impacts on trade, which is a legitimate concern among many developing economies.
In addition to funding the rewards programme for the uptake of low and zero-carbon fuels the contributions by shipping companies will generate billions of dollars annually to support the production of alternative marine fuels in developing countries. The fund will also be available to de-risk the rollout of the new bunkering infrastructure that will be required on an accelerated timescale.
Our immediate goal is to ensure that some kind of levy-based global economic measure will be prioritised for rapid finalisation by the IMO Marine Environment Protection Committee at its next meeting in July. This critical meeting of governments is also expected to adopt a formal net zero target for shipping which will only be truly credible if a measure such as that proposed by the industry is taken forward immediately.
…Simon Bennett, Deputy Secretary General of the International Chamber of Shipping commented:
The level of contributions to the IMO fund will be a decision for governments. However, ICS has suggested that total funds of about USD 10 billion per annum – which would require an initial contribution quantum of about US$50 per tonne of marine fuel oil consumed – could be sufficient to fund a rewards programme up until about 2030 whilst also providing tens of billion dollars to support maritime GHG reduction projects in developing countries.
If we are to have a sustainable decarbonised future, governments need to support the shipping industry’s willingness to come forward with innovative measures that can incentivise first movers whilst also providing support to developing countries.
…Guy Platten, Secretary General of the International Chamber of Shipping added:
The latest ICS submission provides additional information to assist a decision at MEPC 80 in July 2023 about the GHG reduction measures to be prioritised for development, and explains the core elements of the mechanism that need to be finalised and the variables that will determine the initial quantum of the contribution by ships and the reward rate for the use of eligible alternative fuels.
